If the wealthy get wealthier, no one has to become one penny poorer. This childish idea that the economy is a zero-sum game might appeal to the populist sentiments of the so-called 99 percent -- or to the envious nature of some others or to the emotions of many struggling through this terrible economy -- but in the end, it doesn't stand up to the most rudimentary inspection.
Not to mention, tales of runaway income disparity destroying the American middle class have been repeatedly debunked. James Pethokoukis at the American Enterprise Institute recently pointed out that new Congressional Budget Office "data show real median after-tax household income (half of all households have income below the median, and half have income above it) grew by 35 percent over the past three decades."
Over the past half-century, in fact, the wages of the middle class have captured a remarkably consistent share of gross domestic product. And the most important fact that eludes protesters and progressives is that the poorest 5 percent of Americans are still richer than nearly 70 percent of the world -- with a lot more opportunity to change that situation.
But let's concede that, thank goodness, some inequity will exist and will as long as we remain a largely meritocratic society. But even if corrosive disparity is tormenting us, as so many journalists would have you believe, how are we to fix it? Are Americans prepared to take on a massive social engineering project that entails politicians, commissars and czars making biased and arbitrary assessments about who deserves what and who doesn't? That sort of endeavor has been attempted to varying degrees of real economic tragedy. It's the sort of behavior that got us here.
What we should be worrying about is economic mobility. And we do well there, too. A 2007 Treasury Department study showed that 58 percent of households that were in the bottom quintile in 1996 moved to a higher level by 2005, and of households in the top 1 percent during the same time, more than 57 percent dropped to a lower income group. And economist Shikha Dalmia recently pointed to a study by the University of Chicago's Steven Kaplan that "shows that, despite government bailouts, in 2008 and 2009 the adjusted gross income of the top 1 percent -- a disproportionate number of whom work in the financial industry -- fell to 1997 levels."
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